Brady and Associates, LLC

Serving your financial needs today and tomorrow

Business Assets

You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment. You also can depreciate certain intangible property, such as patents, copyrights, and computer software.  To be depreciable, the property must meet all the following requirements.

· It must be property you own.

· It must be used in your business or income-producing activity.

· It must have a determinable useful life.

· It must be expected to last more than one year.

You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most property.  You cannot use MACRS to depreciate the following property.

· Property you placed in service before 1987.

· Certain property owned or used in 1986.

· Intangible property.

· Films, video tapes, and recordings.

· Corporate or partnership property acquired in a nontaxable transfer.

· Property you elected to exclude from MACRS.

Land, land preparation costs and section 197 intangibles are examples of non-depreciable property.

The IRC provides specific useful lives for various business assets.  This does not always agree to the actual life of the asset.

 

Section 179 Deduction

To encourage business investment, the maximum section 179 deduction you can elect for property you placed in service in 2009 is increased to $125,000 for qualified section 179 property.  This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $500,000.  Not all property is qualified property. 

Depreciation